Labor Force Developments

Nationwide, labor force down 2.7% from February, and down 2.4% from year ago.

Figure 1: Civilian labor force, 000’s, s.a. Red arrow denotes year-on-year decline. NBER defined recession dates. A NBER peak was declared for February 2020. Source: BLS via FRED, NBER, and author’s calculations.

In other words, the labor force declined in September, indicating that the labor market recovery has at a minimum slowed, and the scarring effects are getting more pronounced as more people drop out of the labor force administratively defined. (One has to be careful about inferring trends from m/m changes, particularly at the statewide level when it comes to household survey based figures.)

Two days ago, state statistics — which are subject to greater measurement error and calculated using a different methodology — indicated variability in the labor force decline.

Figure 2: Labor force decline, year-on-year (darker denotes larger percent decline). 0.0796 denotes 7.96% decline from September 2019. Source: BLS and author’s calculations.

23 thoughts on “Labor Force Developments

  1. pgl

    “In other words, the labor force declined in September, indicating that the labor market recovery has at a minimum slowed”

    Which is why the unemployment rate fell as the employment to population ratio barely moved. This did not stop the White House from gloating about the fall in the unemployment. That is the garbage one get when one chooses Lawrence Kudlow as one’s chief economist.

    1. Menzie Chinn Post author

      The Rage: Thank you. That’s why I focused on y/y, and why there is this sentence in the second to last paragraph:

      (One has to be careful about inferring trends from m/m changes, particularly at the statewide level when it comes to household survey based figures.)

    2. pgl

      That is true in normal times. Everything is noisy this year. But the economists at BLS do the best they can.

    3. Macroduck

      One should not, however, “be careful ” to the point of ignoring the data. There is clear evidence that the rebound in employment is slowing with only about half of the jobs lost in the initial Covid-induxed plunge having been recovered.

  2. joseph

    Would it be reasonable to just add that 2.7% that has dropped out to the official unemployment rate? That’s the real number of people not working who would otherwise be employed. Dropouts are not counted as unemployed.

    That would help explain the the discrepancy between the official unemployment rate and the projections of 10% unemployment a few months ago. The dropouts are disproportionately women forced to stay home with the kids.

    1. pgl

      “Would it be reasonable to just add that 2.7% that has dropped out to the official unemployment rate? That’s the real number of people not working who would otherwise be employed. Dropouts are not counted as unemployed.”

      You are basically assuming that the employment to population ratio has not gone up much. And you’d be correct. But of course getting this correct disqualifies from working for Trump.

  3. ltr

    As of September 24, has the low wage labor force down 19.2% from January. Middle wage, 27K to 60K, down 4.6%. Shopping is a completely difference experience in my neighborhood, with stores open but lots of previously full-time retail workers evidently gone. When running, there are Amazon deliveries waiting to be picked up or being made in house after house. I expect retail has changed for the foreseeable future, structurally changed, and wonder what this means for employment and earnings. What structural changes have there been?

  4. AS

    Professor Chinn,
    Am I reading the data correctly seeing that Wisconsin’s labor force is up about 1% since February and up about 1% over the past year but down a bit from July 2017? Looks like a labor force decline started around July, 2017, but has jumped back from July 2020 low to about the same level as July 2017 as of September 2020. Quite a different pattern from California and US.

  5. SecondLook

    Perhaps a worthwhile number to consider might be what percentage of the eligable population is opting to get their SS benefits before full retirement age as opposed to prior years. And yes, a certain percentage of “early” beneficaries still work, or seek work.
    I can’t recall anyone really looking at that statistic as an indicator of what is happening in the work force.

    1. Macroduck

      That describes just about everyone of my generation in my family. Some jave jobs. Some don’t. All are concerned that the employment path they had anticipated is now at high risk of disappearing. It was a dumb idea to become service sector professionals.

        1. macroduck

          Public school corporation environmental safety specialist, human resources specialist, geology professor, economist, college administrator, seminary instructor, nurse,…the list goes on and on, once I include cousins.

  6. macroduck

    The data-obsessed may be interested in this:

    The link offers a U. Maryland’s srate-by-state (county-by-county too, if you can get it to load) comparison of Covid, demographic and economic indicators. Lots of flexibility, but I haven’t discovered a way to get the data behind the platform. A real time suck.

    1. Moses Herzog

      I just remember the Maryland Governor’s wife being a real hero on acquisition of PPE equipment. And she also proved wrong donald trump’s theory that all immigrants are a “dead weight” upon this nation~~quite the contrary. And I think in his better moments, or maybe after 3-4 drinks of bourbon truth serum, Larry Hogan might happily confess he’d married way above his head.

      What an incredible lady.

    2. Moses Herzog

      @ macroduck
      I was gonna send this earlier afternoon today but the power here went out for two hours. I doubt if this will be helpful, but on the small chance it might I copied this off the site:

      “To request data files at the national, state, and/or county levels, please email us ([email protected]) from your work email address and include the following information: 1. requestor name, organization, and contact information; and 2. intended use of the aggregate-level results at the state and county levels. The UMD team also welcomes suggestions for additional metrics and geographical coverage as we continue expanding the platform.

      Data published on our platform are for visualization and COVID-19 decision support. Researchers and decision-makers are encouraged to use published data for COVID-19 research with proper citation of the platform based on suggested citations below. Please do not use written descriptions on the platform webpages without proper citation. Reposting of data created by MTI on other dashboards or data archives must be approved in writing by MTI Director.”

      Hoping it’s helpful in some form/way.

  7. Willie

    There is always the Covid factor. Dead and seriously ill people don’t typically participate in the labor force much.

  8. Bruce Hall

    Given the onerous rules implemented at the state level, this can explain a lot about the decline in the workforce.

    The hardest hit sector nationally and in every state continues to be Leisure and Hospitality, in which the Accommodation and Food Services industry has lost 21.1% of its employment, or 3.0 million jobs, and the Arts, Entertainment and Recreation industry has lost 32.2%, or 800,000 jobs as of September. Hawaii has seen the biggest net drop in Accommodation and Food Services—down 58.8%, a loss of 66,700 jobs. (Oct. 20)

    1. pgl

      These sectors are not hit because of states protecting us from this virus. They are hit because customers do not want to expose themselves to this virus. But keep on rehashing Kelly Anne Conway spin. It is all you are good at.

    2. 2slugbaits

      Bruce Hall One of your dumbest posts yet. Do you think that not having restrictions would have saved jobs in the leisure and hospitality sector? Let’s compare two states that proudly refused to impose restrictions (North Dakota and South Dakota) with your state of Michigan. Between Feb and Apr ND and SD saw job losses of 49.2% and 42.3% respectively in the leisure and hospitality sector. Michigan saw a drop of 58.%. So what did ND and SD get for that extra 5% or 10% that they saved in jobs for that sector? Well, in terms of COVID cases per capita ND and SD rank first and second while MI ranks forty-one. That’s a bad trade-off in my book. The main reason the leisure and hospitality sector lost jobs is because most people with half a brain decided that it wasn’t safe to go out to eat and drink. The fact that ND and SD saw steep drops in employment despite not having any restrictions ought to be proof enough. The rationale for having government restrictions is because there will always be some small number of really stupid people who lack impulse control.

      As an economic matter the collapse of the leisure and hospitality sector is fairly easy to fix. All it takes is political will and a Senate more concerned with tackling the economic issues than it is with getting a crazy wingnut on the SCOTUS.

      1. pgl

        “One of your dumbest posts yet.”

        It was really dumb but come on man. Bruce has said many things a lot more stupid. It is what he do.

      2. Moses Herzog

        A lot of dumb Okies have been trying to get Mayors and city councils here fired for making masks mandatory, and many businesses are not truly enforcing it, even if they encourage it. That’s going really swell so far. 22 deaths today and 907 hospitalizations, in a state with a very large rural population and lucky to have so much as a health clinic in a 90 minute drive. i.e. there are people who are probably at home bedridden now who should be in a hospital. And what will it say on the death certificate when they are found dead in their own home, and the Republican Governor, Kevin Stitt, says the family HAS to pay for an autopsy to test/verify for Covid-19 cause of death??

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